US Accuses T-Mobile of Secretly Overcharging Customers

The US Federal Trade Commission on Tuesday accused T-Mobile of secretly "cramming" spurious and unauthorized charges into customer cell phone bills, earning hundreds of millions of dollars in the process. The agency would like to see a federal court force T-Mobile to repay the bogus fees to customers and change its business practices.

"It's wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent," FTC chairwoman Edith Ramirez said in a prepared statement. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."

According to the FTC, T-Mobile earned 35 to 40 percent of the total amount charged to consumers for such bogus third-party services as "flirting tips, horoscope information or celebrity gossip," which typically cost $9.99 per month. These third-party services piggyback on a customer's normal monthly bill from the carrier, so many people aren't even aware that their bill has been "crammed" with unwanted and unauthorized additional charges.

Given the 40 percent refund rate on such services, T-Mobile was clearly aware that these services were bogus, but it continued to allow them because of the amount of money it was earning from unsuspecting customers. And that 40 percent rate only represents the customers who actually complained: Many more customers have been unknowingly paying spurious third-party service charges for years.

Worse, T-Mobile actually worked to hide these charges from customers. The FTC says that the firm did not show consumers that they were being charged by a third party, or that the charge was part of a recurring subscription, when viewing their bills online. No matter how much customers investigated their bill, they could never see the individual charges.

And if customers viewed a paper version of their bill, which is often over 50 pages long, they would need to dive deep to find a "premium services" portion of the bill which listed only abbreviated information about these charges. The FTC notes that such third-party services were often identified by names like "8888906150BrnStorm23918" specifically so that customers couldn't identify them. And pity the poor pre-paid customers, who don't even receive monthly bill statements.

Worse still, when confronted by the spurious charges, T-Mobile rarely provided refunds to customers. "T-Mobile refused refunds to some customers, offering only partial refunds of two months' worth of the charges to others, and in other cases instructed consumers to seek refunds directly from the scammers – without providing accurate contact information to do so," the FTC charges. The FTC also notes that T-Mobile lied to it when the company claimed that the customers had authorized certain charges but was then unable to demonstrate how and where that had happened.

Despite the voluminous charges, T-Mobile says it's done nothing wrong and that the scrappy wireless carrier—which battles the much bigger Verizon Wireless and AT&T Wireless for customers—should be applauded, not attacked.

"We are disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors," T-Mobile CEO John Legere said. "The FTC's lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected."

Apprised of the FTC investigation as early as 2012, T-Mobile in November 2013 finally announced that it would no longer allow third-party "premium" services to piggyback on customer bills. But it has resisted settlement overtures from the agency and will now face the US government in court.

Yes this is bad but what about what ISP's and the cable industry are trying to do is much worse. I'm not saying if T-Mobile is guilty they should be let off, I'm saying that if the FTC goes after T-Mobile they should go after Comcast, Time Warner, AT&T, Verizon and other companies that are over charging customers and trying to become a bigger monopoly than they already are.

Better late than never? I think not. I reported T-Mobile to the FTC back in 2008 and 2009 for fraudulent charges from supposed third party service providers, and the FTC did nothing at all with my case except send me a bunch of forms and then a decision that did nothing for me at all. In the meantime, I refused to pay this legalized theft and T-Mobile put this as a negative on my credit report effectively ruining my credit. FTC!!! PROTECT U.S. CONSUMERS!!! Do your job when you are supposed to, Johnny-come-lately!

This fraudulent behavior is unconscionable but this sends an important message. Americans don't pay any attention to details any more. If you do not take the time to know what you should be paying for services to which you subscribe (or otherwise contract for) then you are going to be taken advantage of by someone. Whether it is OPT-IN / OPT-OUT or some other SCAM, you should always PAY ATTENTION to the details. Caveat Emptor.

When I had worked at Verizon Wireless a few years back it was pretty common to see premium SMS charges on people's bills. This was before the industry moved away from this type of service. What would end up happening is people would sign up for something online or on their smartphones, like free tickets or some free e-cards and hidden in those terms was a premium SMS service. The fact was that these things were itemized on the bill where it could be easy to miss, and the industry often depended on people ignoring what is usually a large bill anyway.

Verizon Wireless gave heavy pushback on reps being able to credit these charges, often referring customer's to the Premium SMS vendor for those credits. Of course those vendors had phone numbers that often wouldn't work, or try to get you lost in the endless maze of automated systems.

It's hard for me to think less of T-Mobile who has done more in the past few years to reverse an anti-competitive trend in the industry. When LTE was introduced and all the big boys dropped their unlimited data plans for expensive and restrictive shared data plans in order to cash in on their new networks, T-Mo shifted it back to consumer friendly practices. I'm aware these guys aren't doing this out of the kindness of their heart, but because of it, i'll find a way to let them off the hook for a past practice that every carrier under the sun did.

T-Mobile isn't the main bad guy in this. By FAR the largest blame lies with the 3rd parties whose whole business model is to trick people into signing up for something they'll get charged for over and over without realizing it. The next largest chunk of blame falls on YOU as a consumer. T-Mobile's role in this (along with every other carrier, by the way) is a lot like the role of a credit card company. If you get tricked into buying something and it shows up on your credit card bill, your credit card statement is highly unlikely to highlight the charge in big flashing lights. If you try to get a charge reversed, your credit card company might do it, but not until they push back. Unless I'm missing something, the only thing that *might* make the cell phone based version of this scam worse than the credit card version is the percentage kicked back to the company sending you a bill. Unless there's more to the story than reported in Paul's article, I see T-Mobile's responsibility here as minimal.

I'm glad to see the FCC has slapped them down for their questionable practices. T-Mobile charged me erroneously for services that were not and could not be provided on my phone. When I contacted them, they asserted that I had to pay anyway because I had not overtly canceled the services after trying briefly a new phone. Call me old fashioned, but it is really surprising to me that a company will not correct a wrongful billing when informed by the user and I am glad that the FCC is causing them to operate with more integrity. It looks like T-Mobile needed some encouragement to be honorable and now they have it!

T-Mobile is definitely guilty of this, and they have done it for YEARS. It happened to me about 5 years ago -- I suddenly was getting $9.95 monthly charges for Moble DADA, and when I asked T-Mobile about it, they just blew me off and said it was a charge from a 3rd party, and I'd have to contact them. So I did, and that 3rd party confirmed that I did NOT have any relationship with them, and I should contact T-Mobile to remove the charge. This is of course an impossible situation when each one points the finger at the other. I had to have T-Mobile but a BLOCK on my account for any 3rd party services, which solved it, and they did eventually refund the charges, but what a hassle it was. It was worse than any experience with a cable company!